TROY, Mich. (Jan. 31, 2018) — Meritor, Inc. (NYSE: MTOR) today reported financial
results for its first fiscal quarter ended Dec. 31, 2017.
attributable to the company of $36 million and net loss from continuing operations
attributable to the company of $35 million.
per share from continuing operations of $0.40.
income from continuing operations attributable to the company of $55 million,
or $0.62 per adjusted diluted share.
EBITDA of $99 million and adjusted EBITDA margin of 11.0 percent.
first quarter of fiscal year 2018, Meritor posted sales of $903 million, up $204
million, or approximately 29 percent, from the same period last year. The increase
in sales was driven by higher truck production in all of our markets, with
North America experiencing the largest increase, in addition to new business
wins and favorable foreign currency impacts.
attributable to the company was $36 million, or $0.41 per diluted share,
compared to net income attributable to the company of $15 million, or $0.17 per
diluted share, in the same period last year. Net loss from continuing operations attributable to the
company was $35 million, or $0.40 per diluted share, compared to net income
from continuing operations attributable to the company of $15 million, or $0.17 per diluted
share, in the same quarter last year. First quarter 2018 results include a $77 million
non-cash tax expense as a result of the enactment of the Tax Cuts and Jobs Act.
income from continuing operations attributable to the company in the first
quarter of fiscal year 2018 was $55 million, or $0.62 per adjusted diluted
share, compared to $22 million, or $0.25 per adjusted diluted share, in the
same period last year.
EBITDA was $99 million, compared to $64 million in the first quarter of fiscal
year 2017. Adjusted EBITDA margin for the first quarter of fiscal year 2018 was
11.0 percent, compared to 9.2 percent in the same period last year. Higher
adjusted EBITDA and adjusted EBITDA margin year over year was driven primarily
by conversion on higher revenue and the favorable impact of changes to the
company’s retiree medical benefits.
by operating activities in the first quarter of fiscal year 2018 was $33 million
compared to cash flow used for operating activities of $14 million in the same
period a year ago. Free cash flow was $15 million compared to cash flow used of
$31 million in the same period last year. Higher earnings helped drive cash
flow performance in the first quarter of fiscal 2018.
First-Quarter Segment Results
Truck & Industrial sales for the first quarter of fiscal year 2018 were $738
million, up $199 million compared to the same period last year. The increase in
sales was primarily driven by higher production in all of our markets, with North
America experiencing the largest increase. In addition, we saw continued
benefits from new business wins, as well as favorable foreign currency impacts
this quarter due to the strengthening euro.
EBITDA for the Commercial Truck & Industrial segment was $80 million for
the quarter, up $38 million from the first quarter of fiscal year 2017. Segment
adjusted EBITDA margin was 10.8 percent, up from 7.8 percent in the same period
last year. The increases in both segment adjusted EBITDA and segment adjusted
EBITDA margin were driven primarily by conversion on higher revenue and the
favorable impact of changes to the company’s retiree medical benefits,
partially offset by lower affiliate earnings from the Meritor WABCO sale.
Aftermarket & Trailer segment posted sales of $195 million, up $11 million
from the same period a year ago. The increase in sales was primarily driven by
higher volumes across the segment.
EBITDA for Aftermarket & Trailer was $21 million for the quarter, down $1
million from the first quarter of fiscal year 2017. Segment adjusted EBITDA
margin decreased to 10.8 percent, compared to 12.0 percent in the same period
last year. The decreases in segment adjusted EBITDA and segment adjusted EBITDA
margin were driven in part by incremental investments supporting revenue growth
Outlook for Fiscal Year 2018
company is revising its guidance for fiscal year 2018 as follows:
Revenue to be in the range of $3.8 billion to
Net income attributable to the company and
net income from continuing operations attributable to the company to be in the
range of $120 million to $130 million (diluted earnings per share of $1.30 to $1.40).
margin to be in the range of 11.0 percent to 11.2 percent.
earnings per share from continuing operations to be in the range of $2.50 to $2.70.
Operating cash flow to be in the range of $210
million to $225 million.
Free cash flow
to be in the range of $110 million to $125 million.
“Overall, this was an excellent
quarter for us. We continue to drive strong operational execution, deliver new
business wins and convert on stronger global markets,” said Jay Craig,
CEO and president. “We are raising our financial guidance for the year to
reflect the continued strength we expect in our results for fiscal 2018.”
First-Quarter Fiscal Year 2018 Conference Call
Meritor will host a conference call
and webcast to discuss the company's first-quarter results for fiscal year 2018
on Wednesday, Jan. 31 at 10 a.m. ET.
participate, call (844) 412-1003 at least 10 minutes prior to the start of the
call. Please reference passcode 1049079 when registering. Investors can also
listen to the conference call in real time or access a recording of the call
for seven days after the event by visiting the investors page on meritor.com.
of the call will be available starting at 1 p.m. ET on Jan. 31, until 1 p.m. ET
on Feb. 7 by calling (855) 859-2056 (within the United States) or (404)
537-3406 for international calls. Please refer to replay passcode 1049079. To
access the listen-only audio webcast, visit meritor.com and select the webcast
link from the home page or the investors page.
Inc. is a leading global supplier of drivetrain, mobility, braking and
aftermarket solutions for commercial vehicle and industrial markets. With more
than a 100-year legacy of providing innovative products that offer superior
performance, efficiency and reliability, the company serves commercial truck,
trailer, off-highway, defense, specialty and aftermarket customers around the
world. Meritor is based in Troy, Mich., United States, and is made up of
approximately 8,200 diverse employees who apply their knowledge and skills in
manufacturing facilities, engineering centers, joint ventures, distribution
centers and global offices in 19 countries. Meritor common stock is traded on
the New York Stock Exchange under the ticker symbol MTOR. For important information,
visit the company's website at www.meritor.com.
This release contains statements relating to
future results of the Company that are “forward-looking statements” as defined
in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases
such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to
be,” “will” and similar expressions. Actual results may differ materially from
those projected as a result of certain risks and uncertainties, including but
not limited to reliance on major OEM customers and possible negative outcomes
from contract negotiations with our major customers, including failure to
negotiate acceptable terms in contract renewal negotiations and our ability to
obtain new customers; the outcome of actual and potential product liability,
warranty and recall claims; our ability to successfully manage rapidly changing
volumes in the commercial truck markets and work with our customers to manage
demand expectations in view of rapid changes in production levels; global
economic and market cycles and conditions; availability and sharply rising
costs of raw materials, including steel, and our ability to manage or recover
such costs; our ability to manage possible adverse effects on our European
operations, or financing arrangements related thereto following the United
Kingdom's decision to exit the European Union or, in the event one or more
other countries exit the European monetary union; risks inherent in operating
abroad (including foreign currency exchange rates, restrictive government
actions regarding trade, implications of foreign regulations relating to
pensions and potential disruption of production and supply due to terrorist
attacks or acts of aggression); risks related to our joint ventures; rising
costs of pension benefits; the ability to achieve the expected benefits of
strategic initiatives and restructuring actions; our ability to successfully
integrate the products and technologies of FABCO Holdings, Inc. and future
results of such acquisition, including its generation of revenue and it being
accretive; the demand for commercial and specialty vehicles for which we supply
products; whether our liquidity will be affected by declining vehicle
productions in the future; OEM program delays; demand for and market acceptance
of new and existing products; successful development and launch of new
products; labor relations of our Company, our suppliers and customers, including
potential disruptions in supply of parts to our facilities or demand for our
products due to work stoppages; the financial condition of our suppliers and
customers, including potential bankruptcies; possible adverse effects of any
future suspension of normal trade credit terms by our suppliers; potential
impairment of long-lived assets, including goodwill; potential adjustment of
the value of deferred tax assets; competitive product and pricing pressures;
the amount of our debt; our ability to continue to comply with covenants in our
financing agreements; our ability to access capital markets; credit ratings of
our debt; the outcome of existing and any future legal proceedings, including
any litigation with respect to environmental, asbestos-related, or other
matters; the actual impacts of our modifications to benefits provided to
certain former union employee retirees on the company’s balance sheet, earnings
and amount of cash payments; possible changes in accounting rules; ineffective
internal controls; and other substantial costs, risks and uncertainties,
including but not limited to those detailed in our Annual Report on Form 10-K
for the year ended September 30, 2017, as amended and from time to time in
other filings of the Company with the SEC. These forward-looking statements are
made only as of the date hereof, and the Company undertakes no obligation to
update or revise the forward-looking statements, whether as a result of new
information, future events or otherwise, except as otherwise required by law.
All earnings per share amounts are on a diluted basis. The company's fiscal
year ends on the Sunday nearest Sept. 30, and its fiscal quarters generally end
on the Sundays nearest Dec. 31, March 31 and June 30. All year and quarter
references relate to the company's fiscal year and fiscal quarters, unless
Non-GAAP Financial Measures
addition to the results reported in accordance with accounting principles
generally accepted in the United States (“GAAP”), we have provided information regarding
non-GAAP financial measures. These non-GAAP financial measures include adjusted
income (loss) from continuing operations attributable to the company, adjusted
diluted earnings (loss) per share from continuing operations, adjusted EBITDA,
adjusted EBITDA margin, segment adjusted EBITDA, segment adjusted EBITDA
margin, free cash flow and net debt.
Adjusted income (loss) from continuing operations attributable
to the company and adjusted diluted earnings (loss) per share from continuing
operations are defined as reported income (loss) from continuing operations and
reported diluted earnings (loss) per share from continuing operations before
restructuring expenses, asset impairment charges, non-cash tax expense related
to the use of deferred tax assets in jurisdictions with net operating loss
carry forwards, and other special items as determined by management. Adjusted
EBITDA is defined as income (loss) from continuing operations before interest,
income taxes, depreciation and amortization, non-controlling interests in
consolidated joint ventures, loss on sale of receivables, restructuring
expenses, asset impairment charges and other special items as determined by
management. Adjusted EBITDA margin is defined as adjusted EBITDA divided by
consolidated sales from continuing operations. Segment adjusted EBITDA is
defined as income (loss) from continuing operations before interest expense,
income taxes, depreciation and amortization, noncontrolling interests in
consolidated joint ventures, loss on sale of receivables, restructuring
expense, asset impairment charges and other special items as determined by
management. Segment adjusted EBITDA excludes unallocated legacy and corporate
expense (income), net. Segment adjusted EBITDA margin is defined as segment
adjusted EBITDA divided by consolidated sales from continuing operations,
either in the aggregate or by segment as applicable. Free cash flow is defined
as cash flows provided by (used for) operating activities less capital
expenditures. Net debt is defined as total debt less cash and cash equivalents.
Management believes these non-GAAP financial measures are
useful to both management and investors in their analysis of the company's
financial position and results of operations. In particular, adjusted EBITDA,
adjusted EBITDA margin, segment adjusted EBITDA, segment adjusted EBITDA
margin, adjusted income (loss) from continuing operations attributable to the
company and adjusted diluted earnings (loss) per share from continuing
operations are meaningful measures of performance to investors as they are
commonly utilized to analyze financial performance in our industry, perform
analytical comparisons, benchmark performance between periods and measure our
performance against externally communicated targets.
Free cash flow is used by investors and
management to analyze our ability to service and repay debt and return value
directly to shareholders. Net debt over adjusted EBITDA is a specific financial
measure in our current M2019 plan used to measure the company’s leverage in
order to assist management in its assessment of appropriate allocation of
Management uses the aforementioned
non-GAAP financial measures for planning and forecasting purposes, and segment
adjusted EBITDA is also used as the primary basis for the chief operating
decision maker to evaluate the performance of each of our reportable segments.
Board of Directors uses adjusted EBITDA margin, free cash flow, adjusted
diluted earnings (loss) per share from continuing operations and net debt over
adjusted EBITDA as key metrics to determine management’s performance under our
performance-based compensation plans.
Adjusted income (loss) from continuing operations attributable to the
company, adjusted diluted earnings (loss) per share from continuing operations,
adjusted EBITDA, adjusted EBITDA margin, segment adjusted EBITDA and segment
adjusted EBITDA margin should not be considered a substitute for the reported
results prepared in accordance with GAAP and should not be considered as an
alternative to net income as an indicator of our financial performance. Free
cash flow should not be considered a substitute for cash provided by (used for)
operating activities, or other cash flow statement data prepared in accordance
with GAAP, or as a measure of financial position or liquidity. In addition,
this non-GAAP cash flow measure does not reflect cash used to repay debt or
cash received from the divestitures of businesses or sales of other assets and
thus does not reflect funds available for investment or other discretionary
uses. Net debt should not be considered a substitute for total debt as reported
on the balance sheet. These non-GAAP financial measures, as determined and
presented by the company, may not be comparable to related or similarly titled
measures reported by other companies. Set forth below are reconciliations of
these non-GAAP financial measures to the most directly comparable financial
measures calculated in accordance with GAAP.